Banks and other financial firms need to get creative to bring sustainable investments into the mainstream, said David Solomon, Goldman Sachs Group Inc.’s chief executive officer.
Conversations with clients about climate exposure have “amped up materially” over the last two years, but sustainable investments like green bonds are still “relatively niche,” Solomon said Wednesday at the Bloomberg Global Business Forum in New York. Such investments represent just 1% of capital markets activity, he said.
Solomon pointed to examples of creative products his bank has been involved with: a bond that becomes cheaper for the borrower if it meets certain sustainability targets, and an equity portfolio that has a “carbon tilt” to slightly diverge from its benchmark index in an effort to lean on greener companies.
The event began just hours after the world’s most authoritative climate-science body, the Intergovernmental Panel on Climate Change, issued a dire report on how the declining state of the oceans and the world’s melting icy regions pose harm to human societies.
Solomon and other executives said they need help from policy makers.
“The finance world is moving much faster than the sovereign world,” Axa SA Chairman Denis Duverne said at the event. He said the International Monetary Fund should have climate metrics that help determine which countries receive investment.
Michael R. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.
This article was provided by Bloomberg News.